This quarter we highlight four state tax developments with significant impact to taxpayers.
On March 31, 2014, New York enacted significant corporate tax reform. Our New York professionals summarize the highlights of this new legislation, including: eliminating the bank franchise tax and subjecting all corporations to a revised corporate franchise tax; reducing the tax rate from the existing 7.1% to 6.5% effective for tax years beginning on or after January 1, 2016; establishing economic nexus; replacing the state’s existing combined reporting provisions with a unitary combined reporting system; and revising net operating loss provisions.
In the highly anticipated Gore decision, Maryland’s highest court ruled that two subsidiaries of an in-state parent had nexus with Maryland because the subsidiaries had no real economic substance as business entities separate from their parent. In doing so, the court rejected the lower court’s ruling that established nexus between Maryland and the subsidiaries due to their unitary relationship with their in-state parent.
We also summarize two federal hearings that have an impact on state and local taxation - Congress’ hearing on the Business Activity Tax Simplification Act and the US House Judiciary Committee’s hearing on internet sales tax.
The developments section summarizes significant state and local tax developments over the last three months. Each item is linked to a PwC Insight that provides analysis and observations regarding the development.